DeFi by Design EP#4: Building the future of DeFi together w/Aave

Transcript

welcome to d5 by design where we talk all things blockchain and cryptocurrency while striving to educate empower and enrich what's going on guys welcome to episode three of the d5 by design podcast we are here with mark from ave mark has been working at ave for a bit and is super super educated with everything defy um and we are really excited for this one i'm here with co-host rob as well rob hey guys how's it going uh mark really excited to have you on i i think we're just continually stepping up the talent on this podcast so i'm really excited of has a lot of great things in the works and we have some really interesting questions so i'm ready to learn and talk to you find it super cool to be

here and let's dive into it yeah of course mark real quick could you give the listeners like a 60 second background into who you are kind of what you do how you got into all this stuff real quick so basically my involvement with crypto started in 2013 with bitcoin uh so basically that was like the first bubble of bitcoin that attracted a lot of agents and i was part of that wave and basically my interests were renewed and increased exponentially in 2015 when i discovered ethereum with a friend and i like it so much that i created as you can hear it i'm french with a few friends italian friends community

we did meetups we organized the at cc which is one of the biggest ethereum conference the last one was in march i joined consensus in 2016. i joined a regulated french broker called coinhouse in after that and i'm super happy to have joined rv uh at the end of 2019 in order to prepare the launch of the ave protocol which is my activity right now as the integration needs and basically my job is to make third-party developer life easier uh in the process of their integration of the other features into their adapt that's awesome it's really cool that you got involved in ethereum and the france community and

you were part of you know this worldwide network but in your local community and you were you know working on it together that's actually how i met andrew we uh attended a school at uf university of florida and we're working on the gator blockchain um community here so it was an on on campus organization and you know it brought a lot of interesting and like-minded uh people together so how did you get involved in ethereum france what was it like working in that local community we basically created the community so we are in france a very active crypto and blockchain community since years uh yeah the biggest one is named crypto fr uh which is like crypto france and

basically uh we wanted to have something dedicated to ethereum because one of the great parts of ethereum it's just uh you you can do a lot more things than just buy some heater and wait for number go up uh you actually can def some smart contracts create your own dabs uh and do a wide range of things and basically when you interesting in a brand new technology everybody is terrible at it like even if you are a good developer nobody knows about solidity in 2015. there were no experts there were everything to learn at this point so it was a lot of demands uh you know within the the social media

especially reddit at the time uh and basically ethereum front started on reddit and to say okay what can we do with this thing it's super interesting but i don't understand anything so let's suffer together and be better together and that's probably one of the reasons there's so many french developers uh within the itarian ecosystem because we we are the huge crowd and a very active community in france since years so and we just push each other and try to spread knowledge and and teamwork on this and that's why i think the french are very present in the device fair yeah i mean the overall involvement of a global community

is so cool in the entire space obviously you're in france we're in the states right now there's going to be folks who are listening from hong kong to singapore to canada that's super super interesting and the fact that we can bring all these users into a protocol like ave or you know any other other of these d5 protocols and allow them to all interact on one platform effectively now with that comes a whole lot of challenges and risks and problems and and day-to-day keep up so in your day-to-day with avec kind of what does that look like with the team how does the team work together how is the community what is your day-to-day and the ave team what does that look like on a weekly and a monthly yearly basis so basically one of the things i want to

highlight is that we actually decentralize uh even as a team so the whole protocol is obviously decentralized but our team is as well uh with rv we have two headquarters the operational one in london and the technical one in switzerland but i will say that more than half the team is never at the office i never stepped foot at any of the rv office or at least the london one since i work at harvey and i only work remotely and we have people all around the world and basically all are they work is that we are all very specialized and we have our core activity and we have a lot of independence into

that so we have direction we have a strategy but basically the integration team is three members and we do ninety percent of the job or uh it depends and that's super interesting the amount of creativity and independence you can express when your organization just said well you have these skills use those skills to to do good state and that's it and so my day-to-day activity in the integration team is a lot of goal like a lot a lot of time with potential partner for integration i basically do that all day because my job is to make the integration process uh as easy as

possible so if you are if you haven't you're doing a good job mark you're doing a good job mark i'll tell you that well we are more than 100 integration in six months so yeah a lot of stuff but not at the level of shelby like changing their matching i don't know what is their integration team maybe they are 20 or they are incredible they have like maybe three to five integration per day yeah yeah so as you explain like the ave team is decentralized right you guys are all remote there's two places you know two offices but um has that kind of contributed to the

transition from lend to ave or what was that process from you know taking the team in this decentralized way obviously what obvi is now and and where and how does the lend transition to ave kind of come in there um for those of you who aren't or who are completely new lend is the is the token that was traded for the past what two three years now and has now shifted to ave obviously you joined just in the last 12 months or so but talk to us about like the decentralization and kind of how that choice was made to switch that whole idea and the concept to abe from land so basically our wall uh strategy and everything we do at avi is just taking steps towards more

decentralization so we started three years ago in 2017 and the produce was released uh early 2018 with atlanta which was peer-to-peer lending so completely decentralized on the ethereum blockchain but it's actually all the matching between a liquidity provider and upper border so not super efficient compared to the landing pool architecture for example that we have right now on ave but it's the first step then we released a completely decentralized protocol based on the landing pool that what happened at the beginning of the year and what will happen very very soon and basically this month is

that we're gonna do the migration of the land asset into the rv assets and the rv asset will be the center of gravity of the ave ecosystem it will be uh an asset you can take to use a world that people are used to with what we call the safety mining so you will be able to stack your rv assets into what we call the safety module and basically you will earn almost all protocol fees with the responsibility that if there's a protocol failure you will maybe have part of your stake slash and that's the first part so it's an asset that will allow you to collect almost all

protocol fees and the other part is the actual voting and right oh wait pause real quick mark so you're saying that ave holders will earn a cash flow or a dividend effectively from the protocol just for holding the coin from sticking the coin so okay from staking right right okay cool so it's an actual work right because you take a risk well it's a right it's a risk that is very low because we audit every line of code we push into production and we safety has always be our priority but there's still a risk there's no zero risk and basically if you stack you will collect all the protocol fees and almost all the protocols we will

talk about that later and as well on the governance side on the government side you are full control of the ave protocol if you want an asset listed you vote for it if you want an asset with more ltv more collateral factor you vote for it if you don't want a feature that we propose you vote for it and basically you are in full control and right now there's some admin key to proto protocol so we never had the possibility to take user font or inter uh interfere with the user position because it doesn't make sense to have this kind of power but we add the power to for example pause or reserve or list a new asset and basically what will happen with the

uh the migration and the beginning of the governance is that we're gonna burn uh the actual admin keys and the world protocol will be in control of the other order so when you have rv you have access of all the earnings all everything that is earned by the protocol and you are in full control of the protocol and i think it's one step further into decentralization before that we have decentralization in terms of the financial part in terms of the user funds and now we will have decentralization in terms of governance of the uh the actual protocol so mark that is really exciting because you're talking about uh increasing decentralization part of

that is bringing out proof of stake and that's pretty much what ethereum has been working on for the last five years correct me if i'm wrong and you guys are rolling it out at a pace that is beating ethereum so you know can you can you talk a little bit about like you know maybe what you've learned from ethereum and you're taking away from other d5 projects and what you guys are implementing uh and plan to implement in the future to you know maybe solve the problems that ethereum and the rest of the community are facing well to be fair with the ethereum foundation it's much easier to do for us because we don't have to under the consensus of the world distributed ledger like uh like ethereum they basically need to uh

solve the the proof of stake issue and for us we call that staking we call that we use this kind of word because it in the general audience it's something that everybody integrated but at the end of the day it's a safety mining process we don't mind block we don't participate to the consensus or uh of the blockchain and i think that's one of the most interesting part of the ethereum ethereum allow you to build on top of the uh the settlement layer on top of the actual blockchain like it's so interesting and it allows you to focus on your core project and that part can be generalized

more and we can focus on that in the fact that we don't have to handle uh for example the mining with uh with ave because we are built on ethereum but also we can be focused on our actual core feature we don't have to handle the oracle system because we use and we are powered by chain link that provide the price feed for the market so we don't have to reinvent the price oracle which is a lot of work and very costly and very complex to do we don't have to reinvent the stablecoin credit because you have curve that is the best of the world to do that so basically if you want to swap a token you just do it on curve and it will work and

be super efficient we don't have to reinvent your farming because there's white swap and all those protocols just work together and it's only possible because we are decentralized and because we are military and that network effect makes me a firm believer into ethereum and make me really do believe that it's very hard to be an ethereum killer in 2020. maybe they had a chance in 2017 or 18 but it's too late guys it it's so cool now that all these projects are working together and they're like building layers on top of each other um yeah for example if ave will be in on polkadot tomorrow

we will probably only retain five percent off of tbl and all users at best because rv is not that important what is important is are they with curve are they with balancer are they with uni swap are they with one inch and so on and so on are they with chemnik and if we decide to go to an ethereum killer chain well you lose all that we just done uh landing pool protocol which is cool but it's even better with all those scenarios yeah so you don't you don't see scaling as an issue is what it sounds like with ethereum no no because at the end of the day what will happen on ethereum

already happen uh it's like a first-world problem for blockchain uh having too much activity on the settlement layer and basically it already happened since years on bitcoin and basically bitcoin solved that issue because they say well we are a storage of value that's the settlement layer if you want to transfer one million dollar do it on bitcoin legal one you will pay one dollar for that and nobody cares because you are actually transferring one million dollar if you want to pay for your coffee just use lightning network just use liquid and that's perfectly integrated into the bitcoin committee they they were when a blockchain reached much security obviously the block are full but the solution is not to have

bigger block like they tried to do with bitcoin cash or bitcoin sb the solution is just to understand that the layer one is the settlement layer for the high value transfer and all the other stuff should happen on layer two and basically what will happen this year with rv is that we are a multi-market approach so you have the harvey man market you have the uni swap market and you will have a lot of new markets uh that will happen this year and a few of them will be actually on layer two so if you for example if you have 100 dollars what no let's say 100 die it's not interesting to use rv because the gas you will pay to actually deposit

into rv will represent for you probably uh three to six months of interest so it doesn't make sense if you have ten thousand dollars you don't care because it will represent at best one week uh worst case scenario one week on interest and basically if you have 100 just deposit on the youtube and you will pay very small fees and everybody wins that way and as we have the multi-market approach you can pick the solution that is best for you and we keep uh this kind of composability that is so important into d5 because if someone wants to build and it's completely random examples uh this is not uh announcements but if we

want to be on solana and ftx that are that is really close to that solution have some product we can have some synergy with them on this but if another project uh want to move into polkadot for example uh if we talk about crushing synergy well they will uh be able to access other market there not the same rv market but still in other markets and we will make sure that the liquidity and you will access yield opportunities on all of them so yes scalability is not an issue so this is probably the the worst time of the history or

ethereum in terms of gas but this is history like in six months we will laugh about it yeah it's certainly been a thing on the ethereum's minds of how can we handle this gas and you know as you said like the whales and whatnot they don't really matter but for the common user you know they do matter and i think that those users will be coming very soon into crypto again into d5 right in the last you know big hype cycle we saw all these exchanges just getting flooded and there was a lack of new accounts there was people who were selling accounts on bit tracks for like a thousand bucks just to have an account it's absolutely insane so right now it kind of feels like we're like on the rocket ship that's headed towards a massive influx of users so at ave and

with ethereum in general what are you guys doing to prepare for this influx of users is there anything that you guys have to do or are you ready what's your take on the influx of new users for the ave protocol itself and how does that account for the ethereum scaling too so i cannot disclose everything that we are preparing but it will be announced very soon uh i warned you about that uh-oh guys you heard that big announcement coming soon but basically the gas cost of using ave will be alf in most situation and even lower than that so there's gonna be a lot of gas optimization that is incoming into avi and also

the layer two solution so basically you will have access to rv market with almost no or very limited transaction fee it will not be the layer 1 market but it will be a market that will work exactly the same way than ave that you know right now and i think it makes sense to have a market for users with small amounts for example ave is very very popular in argentina like they love adai and they use that a lot and for example right now it's very hard for them to use avi because obviously after the transaction fee and we did a campaign for six week with argent and we were actually doing

the subsidy of the gas and we cannot announce everything but there's going to be meta transaction and really your nodes that will make things easier in terms of user experience it's not because it's layer 2 it's not because it's optimistic roll ups and all this very technical stuff that it has to be complex for the user for example and i go back to bitcoin because it's a more mature ecosystem if you want to use lightning network right now on bitcoin you just download feelings for that on into your phone you don't have to know what the channel is you don't have to know what is the lagging network invoice is you just can acquire code and that's it they do everything

for you and and you can even send bitcoin from mayor one directly to your phoenix wallet and they will open uh the china for you on your site so your user experience is completely seamless and don't you believe that with so great experience such as argent it will not be exactly the same in a few weeks or months uh inside the term yeah i mean arjun is taking control of that d5 wall as like the d5 wallet however i just saw that i i believe was called dharma they just released um they have no gas fees on their app but there's some sort of trading fee or something like that so it's kind of just like a competition now and then you got one inch has these qi tokens or whatever they are

so i've seen a lot of answers to that question as you're saying is trying to optimize the gas fees because that's going to be the biggest thing is the gas use for you know a noob who wants to come in with and i say noob with quotes you know with 200 bucks or 100 bucks and they don't want to pay nine dollars just to do a simple transaction that's just not gonna work rob do you have anything on the gas fees or anything about the scalability that we didn't mention um yeah i was gonna ask mark like for that that noob or that person that's just coming in you know if they are mildly concerned about gas fees maybe they have you know a substantial stack but they don't want to get caught in any situation where they're paying enormous fees where do they start you know there are

some options with felis trading but are those more complex you know what would you say to the person that's entering the market and they're going to shift some capital allocation over to crypto and into d5 where do they begin i think one of the topic we didn't talk yet about is uh the deficit synergies and i think that will be basically the rocket proponent of defy we often very blindly uh try to oppose defy and c5 like saying defy is good the future of finance and c5 is bad because it's centralized custodian and whatever and of course i do prefer on the personal

level defy but it's easy to say for me because i have more than five year experience into ethereum using a ledger is completely natural i can write codes i can use metamask and whatnot and whatnot and not everybody is like that and not everybody will be like that and basically uh what we are not uh careful enough to consider is that there's more and more centralized exchange centralized service that are more than happy to provide to their user defy services and the good part of being a centralized exchange and being a custodian is that you can actually batch and for example let's say and just an

example kraken you have an account of kraken and you know how to use a centralized exchange because that's the amount of technicality you are used as a default uh as a blockchain user or whatever a crypto user and you will have a earn button tab directly into the website and basically they can batch if you have 100 bucks they can wait make you wait that maybe 100k is collected from all the users that want to deposit and just do one transaction on the br f of the user uh directly into rv and basically but because the the gas price doesn't scale with the volume so if you deposit 100 bucks you will pay six dollars

gas fee if you deposit 10 million bucks you will pay six dollars that's how it works so but if you batch 1000 users of 100 bucks the fee for them is almost nothing and as an exchange you can offer that as a service and that's something people don't consider but i think probably the two next year until ethereum 2.0 or until the fact that layer 2 takes some steam and takes some traction there will be more and more and more uh defy c5 synergies and the future a lot of the newcomers in 2d5 will just use the exchange they are and the partner they are used to use today and i'm fine with that

it's like the user experience you're having to c5 with the safety and the yield you can earn into d5 and because i'm fine with that with the fact that as a user you have a choice if you want to do your homework and don't rely on the third party that you want to trust well at any given time you can withdraw your phone from the exchange and deposit directly into other and having the shows make the world different does that come with any security risk or privacy compromise when you connect your address to you know an email or any personal identifying information is that going to be with you forever because you know you can change addresses i

ideally that would cancel out that private information but then you you would track the coins right so you know you can take steps away from you know getting a security risk or privacy but does connecting to a c5 source at any point would that just ruin your defy experience or is there some connectiveness that you we could have there at the end of the day it's if you want pure decentralized permission based experience you have to do for no you have to do dm work to learn to interact uh with decentralized platform that means having a metamask for example into your browser wallet having a ledger and you

yourself the transaction obviously there's always some trade-off so if you use a centralized service and that centralized fairly do kyc they will have your information that being said if they actually batch and i think they will do that because it only makes sense from the economic part because you can do economies of scales the deposits what will appear on chain is not your address it's just the smart contract that collects the user from from that exchange or that that service provider that deposit into rv so your privacy will be a bridge with the centralized service not on chain

but it's a privacy right so if you're able to keep it all separate i mean and at what point is privacy kind of a meme as well right because i mean like at what point are we voluntarily giving all of our data up to big tech every second of the day you know what i'm saying like when you can try you can try but at what point is true privacy unless you're going to go completely off the web um buy a bunch of monero and move to a private island then like at what point is it a real meme but i mean that's something that is definitely to be concerned about though for the d5 users who do want that privacy yes and you know it's very interesting the difference in culture between bitcoin and ethereum on that topic like for example on bitcoin

uh reusing twice the same address is very very much from above for example you have mixing service like wazabi and uh we are pool from samurai all this kind of service and you are very much encouraged to use them on ethereum everybody put their ens address like multi-dot you can see how much money they have in their wallet exactly if you want to know how much i make my salary is because i'm failing yeah if you if you want to know my salary just type maxwell.eats on haters kind and you will see how much i make

but what kind of risks does that impose you know like if i pull up somebody's page who's got a hundred thousand five hundred thousand a million on his address i mean a he might not be the smartest cookie to have all his money in one address but b like i mean at what point are we trying to keep this open finance world also kind of private you know because it's an interesting like up and down and and paradox of what we want in an open finance world and yeah i think that concept of the dot if address is is real funny robbie have you got one of those yet no no what what tell me about it what's the ie's address yeah all right so i'll do the i'll do the layman's version [Music] yeah so so basically on the internet you

you have the dns which is the domain name service so basically when you type the twitter.com at the end of the day the server is just resolving that address to ip address and directly communicate uh with your browser and it's basically the same thing happening on ethereum because ens stands for ethereum name service and instead of 0x and 42 uh hexadecimal character you will get for example maxilla.et and it's human readable stuff for the user it's definitely a meme that's pretty cool yeah we can all create one yeah we definitely could yeah so hey mark so we have about i don't know maybe

five five minutes left um before we wrap it up we definitely want to do like a little rapid fire round at the end but a few more questions for you that um i think you could definitely attend to here so there's a whole bunch of ideas right now on to how to best create a protocol that is decentralized uh what kind of economics of a token of the protocol of the founders of the pre-mine of the launch of using a centralized exchange blah blah there's so many things right so if you were to just create your own protocol so step away from everything and go into mark's world and create mark protocol right what are some of the ideas or fundamental ideologies that you would carry with you you know to that other protocols can either learn from or that you think are

the most important to the entire ecosystem of decentralization and the efficiency and effectiveness of these protocols kind of what are like some of the thoughts and ideologies you would bring to your own protocol or to mark protocol well the first thing is that don't create a layer one because that's a mean from 2017 and all the guts because shane will die eventually like it doesn't make sense like uh right now there's like two actors there's bitcoin the store value and ethereum uh the uh the protocol of everything that you can build upon it and basically don't create a layer one because who cares about having to handle the mining and the consensus of your protocol it doesn't make sense

just build on ethereum or use bitcoin whatever and the second thing is that if it's a decentralized finance protocol it's really important to emphasize and decentralize and basically it makes no sense that you have a team that is in control of your protocol basically our job at rv and the other team there's 22 of us what will happen this month is that our only job is to submit id put them to vote and then convert the vote into safe and audited code that can be implemented on the blockchain and basically we work for the rv holders we just here to transform what is

designed from the governance into actual code and actual feature that people can use and i think it's much more interesting like that because there's only 22 of us but if you check the land token holders there's more than 160 thousand as of today so the amount of creativity and different point of view and the governance you you can find from that is probably vastly superior of what we can do alone and the other aspect is the synergy it doesn't make sense to recreate everything focus on your call feature if you need an oracle you shouldn't if you you need stable current swap

use curve don't create your own just focus on something you are very good to do and do it all the other stuff plug with the other because d5 is probably the first time that you have an ecosystem where synergy are more interesting from a business side and from a development side and from the gross side than competition it makes zero sense to actually be in competition in 2d5 today because our only job as defy actors is to grow the overall size of the pump we are right now in a very small pond compared to traditional finance and our job is to eat traditional finance and we will do that over the years and we will create

protocols we will create bridge and we will create something and a world ecosystem of financial service where you as a user are in full control of your money because you should be the owner of your own money without parties uh having to trust whatever pay rent fees and commissions and whatever we have in the traditional finance so mark a little bit more on the you know being your own owner of your own money i think we have one more question for you and then uh andrew's gonna start up a rapid fire round so one thing our community wanted to hear was you know picture your you know yourself walking around

and you head into an elevator and jeff bezos is in the elevator or you know look up to your your trillionaire your billionaire of choice what's your one minute pitch to pitch him on d5 well there's no pitch because i don't like to share alpha he's already rich i'm here to make the order so i will just watch my shoes and don't share like millions of dollars with someone that doesn't need it fair enough keep your alpha i don't know man you were helping me out with those y a link picks man that was some good information yeah but you're not a three or a trillionaire yet when you get yourself like 100

billion dollars i will not help you anymore yeah so so it really is too early for some of those you know huge investors or are we working up to that and you know i i guess that is a little bit more serious but like are we not there yet what do we have to do until you know people that are of that level are interested in d5 well that's the good part about actually providing equity in 2d5 protocol is that there's no well obviously there's limit to that if you want to add 100 billion dollars there's not enough stable coins in the world to do that but i'm sure

usdt will just their way to to get you that but but there's no actual limit or sleep age like for example if you want to buy 10 billion dollar of bitcoin uh you will just pump up the price uh like crazy or same with ethereum even worse with return but if you want to provide let's say 10 million dollar of a stable coin into avi nothing particular happen you just add more liquidity so the interest rate goes down but the market will reach equilibrium because it's absolutely cheaper to borrow and ave and that's it and that's why more and more and we saw that like over the past few

weeks that more and more institut institutional investors are so interested in 2d5 because they can actually act as liquidity provide a result with sizable elements without being completely destroying the value of the protocol because they they uh actually did too much slippage or whatever so that's why you have protocol like wi-fi white swap that in four days reached like 300 million dollar tvr because you can actually do that you can deposit 100 million dollars into voiceover protocol and it will just work yeah so some of them are already there there really is just a lack of

knowledge out there for for like a mass investing space but the it sounds for the like for the most part one thing and also the other thing is that uh they love defy but it's very hard for an institutional investor or h-bonds or whatever to actually use defy because when you have like 100 million dollar under management into your wrist part and you say okay let's go into avi or into compound or whatever well you don't want to put that 100 million dollar into the hands of a of an employee with a ledger that would be like what would happen this is blockchain the guys just need to do

a transfer to any address and nobody can take the money back from him so even if he go five years into prison that might be interesting for him so basically those kind of actors they need custody and solution actually custody wallets and all this kind of stuff and those kind of actors are more and more adding d5 services but uh they are lagging a little bit and most of them for example we have very few of them that are integrating as of today uh it will not be the case anymore uh in a few weeks because we are working activity on that and that's basically the bottom name for them they want to provide liquidity but they cannot do it in a very safe way

that they are used to because we all want to be the owner of our own money and so on and just other ledger but when you are using other people phones as your job as a film uh that's just not all things work yeah it's a bit different when using other people's funds it's uh slightly more risk just slightly um great mark great well look we are about out of time i'm gonna bust off some quick questions answering a sentence or two or a few words if you don't want to answer just say pass no worries all right so this one's a yes or no of a top 10 in in coin market cap by the end of 2020 yes or no

that's conservative okay okay price of bitcoin by the end of 2020 malden how many twitter followers will you have by the end of 2020 oh yeah prediction for the worse i have right now i don't know i say over ten thousand i'm going with over nine thousand meme over ten thousand overnight yeah that's a good one number um will wi-fi ever beat price-wise in terms of bitcoin will it ever be higher than than bitcoin yeah wi-fi yes sure but in terms of market cap in terms of

no units of the actual price and the last thing is the uniswap craze is it hype is it scammy is it legit how do you feel about all the unit swap craze um it's not great it's just the future of finance so there you go yeah you there you have it that is mark zeller from ave mark it has been an absolute pleasure uh this has been a great conversation learned quite a bit had some interesting points from all of us um and yeah just fyi guys obviously this is not any sort of financial advice we're all here to spread the education and the awareness um you know please do your own research we did talk a lot about ave and some other investment type stuff but

just please do your own research and yeah rob thanks mark for coming out um i know i learned a lot and i have some more things to check out you know hopefully we can do this again when obvi's in the top ten conservatively i'll see you next week see you all right thanks thanks for listening to the defy by design podcast until next time d5 slate team